NFIB Weekly News
Leading the News
Dunkelberg: Most Small Business Owners Expect Supply Chain Disruptions To Continue Into 2022
NFIB Chief Economist William Dunkelberg wrote in Forbes (7/28, Dunkelberg) that “with supply chains not working smoothly” due to the pandemic, “imbalances between the supply of goods and services, and the demand for those products are now center stage, creating an environment of rising costs and, subsequently, higher prices as those costs are passed on to consumers. Owners are reporting the highest frequency of price hikes for their products and services since 1971.” Dunkelberg said that “almost two-thirds” of those impacted by these disruptions “anticipate having to manage through for more than six months, extending into 2022.”
US Economy Rose To Pre-Pandemic Level In 2nd Quarter
The Wall Street Journal (7/29, Cambon, Subscription Publication) reported that the US gross domestic product grew at a 6.5 percent annual rate in the 2nd quarter, raising the size of the economy to its pre-pandemic level, according to data released by the Department of Commerce on Thursday. The GDP had grown at a 6.3 percent annual rate in the 1st quarter.
NFIB: Senate Bill Limiting Small Business Deduction Will Hurt Small Businesses
The Washington Post (7/29, Siegel, Van Dam) reported that the economy “was officially back and fully recovered from the coronavirus pandemic as of June, although a recent surge in cases could bring new uncertainty.” However, “that doesn’t mean the economy is back to the level it would have been at had the pandemic not happened, because about a year of continued economic growth is missing.” The AP (7/29, Crutsinger) said the economy is “showing sustained strength.”
The Hill (7/20, Jagoda) reported that Senate Finance Committee Chairman Ron Wyden (D-Ore.) “released a bill that would overhaul a deduction for noncorporate business income that was created by Republicans’ 2017 tax law.” NFIB Vice President of Federal Government Relations Kevin Kuhlman “said in a statement that Wyden’s bill ‘would directly hurt small businesses’ ability to hire, invest in their businesses, and increase employees’ compensation, and threatens the fragile economic recovery.’”
SBA Distributed Only $3B Of $30B In Targeted EIDL Funding
KTVT-TV Dallas (7/23) reported Friday the SBA “has handed out less than $3 billion out of the $30 billion in COVID-19 aid program meant for small businesses in low-income areas.” Despite this, KTVT says “some small business owners said getting the help they need has proven to be difficult.” KTVT states many business owners feel the map used by the SBA to determine eligibility is “flawed ... At several intersections, businesses on one side of the street are in a deemed to be located in low-income area while businesses across the street are not.” KTVT also says, “Some small business owners also said, even if they qualify for the aid, it is taking months to be approved by the SBA.”
NFIB Chief Economist: Re-Open The Private Sector To Keep Recovery Going
NFIB Chief Economist William Dunkelberg wrote in Forbes (6/21) that economic growth was “stunning” in the first quarter of 2021, yet “was held back by shortages of microchips, houses, and labor just to name a few items.” Dunkelberg said, “Growth rates in states that have re-opened more quickly are substantially better than in states that have re-opened less, and unemployment rates are lower as well,” and concluded, “re-opening the private sector is probably the best recovery policy that government can undertake.”
Economy Grew 6.4% In First Quarter
The AP (6/24, Crutsinger) reported the Commerce Department said Thursday that the U.S. economy grew at an annual rate of 6.4% for the first quarter of the year, “setting the stage for what economists believe may be the strongest year for the economy in about seven decades.” Many economists believed that US economic growth has continued in the current quarter.
Business Investment Is Fueling Economic Growth. The Wall Street Journal (6/27, Chaney Combon, Subscription Publication) reported business investment is fueling economic growth that is likely to sustain the recovery. According to the Commerce Department, nonresidential fixed investment increased at a seasonally adjusted annual rate of 11.7% in the first quarter. Business investment also posted double-digit increases in the third and fourth quarters last year and is currently higher than its pre-pandemic peak.
Labor Department Says US Labor Costs Increased By 0.7% In Second Quarter
Reuters (7/30) reported the Labor Department on Friday announced “the Employment Cost Index, the broadest measure of labor costs, rose 0.7% last quarter after gaining 0.9% in the January-March period,” which “raised the year-on-year rate of increase to 2.9%, the largest gain since the fourth quarter of 2018, from 2.6% in the first quarter.” Reuters reported the increase in “wages and benefits to attract workers” supports “views that high inflation could persist beyond this year amid supply constraints.”
US Commuters, Workers Uneasy As Delta Variant Spreads Across The US
Reuters (7/30, Caspani, McKay, O'Brien, Reid) reported that US commuters are feeling uneasy as the Delta variant of the coronavirus spreads as corporations force workers to return to the workplace. The article noted that earlier this year, the pandemic “ebbed as vaccines became widely available and states loosened most restrictions.” This is being rethought, however, as the delta variant spreads in the US. The White House announced last Thursday that government workers will have to show proof of vaccination or wear masks, practice social distancing, and receive regular tests.
Commerce Dept. Inflation Indicator Spiked Higher Again Last Month
CNBC (7/30, Cox) reported on its website that the Commerce Department revealed on Friday that “an inflation indicator that the Federal Reserve uses as its key guide rose 3.5% in June, a sharp acceleration that was nonetheless right around Wall Street expectations.” CNBC said “the personal consumption expenditures price index, which excludes food and energy, was expected to increase 3.6% at a time when the U.S. economy has seen its highest inflation pressures in more than a decade.” According to CNBC, “That gain was slightly ahead of the 3.4% May increase and represents the biggest move since July 1991.”
Moody’s Report Says Infrastructure, Budget Packages Would Grow Economy, Create Jobs
Roll Call (7/21, Weiss) reported Democrats on Wednesday cited “a Moody’s Analytics report saying the emerging $4.1 trillion combo package of spending on physical infrastructure and education, health care, child care and other aid to households would grow the economy and create jobs despite being offset with tax increases.” The report “says that enacting the $579 billion ‘hard’ infrastructure piece...on its own would actually be a drag on growth in the short term because some of the offsets would take effect immediately while the spending is slower to roll out. But by 2023, inflation-adjusted economic growth would be 0.6 percentage point higher, with 650,000 new jobs created by mid-decade.” If lawmakers pass “the $3.5 trillion budget reconciliation package under discussion, any negative growth effects in 2022 would be canceled out and real economic growth could be nearly 1 percentage point higher, Moody’s said.”
May Consumer Spending Stagnant As Inflation Climbs
The AP (6/25, Crutsinger) reported, “Consumer spending was flat in May with incomes dropping for a second month as the impact of the government’s pandemic stimulus payments waned.” There was, though, a considerable increase in inflation with prices not counting food and energy rising by the biggest magnitude in almost 30 years. The consumer spending reading “represented a marked slowdown following gains of 0.9% in April and a 5% surge in March, the Commerce Department reported Friday.” However, while incomes declined by 2%, wages and salaries rose 0.8%, “reflecting rising employment levels.” The AP adds, “Inflation tied to a gauge of consumer spending that is closely watched by the Federal Reserve increased 0.4% in May and is up 3.9% over the past 12 months.” That marked the biggest 12-month rise since 2008. Meanwhile, core inflation, which doesn’t account for food and energy prices, climbed .5% during May “and is up 3.4% over the past 12 months, the biggest jump since 1991.” Reuters (6/25) says, “There was, however, some good news on inflation. Consumers this month perceived higher inflation to be temporary, a survey showed on Friday.”
Republicans Warm To Taxing Tech Companies To Support Rural Internet Subsidies
Axios (6/28, Harding McGill) reported key Republicans “are warming to an idea that was once anathema to the party – leveling taxes on big American companies to pay for internet subsidy programs.” The source of revenue “could help shore up a struggling subsidy fund that supports broadband in rural areas, schools, libraries and hospitals.” GOP FCC commissioner Brendan Carr’s proposal to “force tech companies to pay into a pool of money used to fund broadband programs is gaining steam with some key lawmakers.” House Minority Leader Kevin McCarthy “called the proposal ‘thought-provoking,’ and his office notes that video streaming accounts for more than 50% of web traffic and online advertising is a $100 billion a year industry.”
Small Business Marketing
SBA Launches PPP Forgiveness Portal
The Wall Street Journal (7/28, Scott, Subscription Publication) reported the Small Business Administration (SBA) has launched its Paycheck Protection Program (PPP) forgiveness portal, which will allow the agency to offer direct forgiveness to borrowers with PPP loans up to $150,000.
Thomson Reuters (7/29, Tam) stated that “the new Direct Forgiveness portal will begin accepting applications from borrowers on August 4, 2021.” The article added that “borrowers may only submit their forgiveness application if their lender has opted in.” The SBA said the new process will “rush relief to over 6.5 million smallest of small businesses.” According to the article, “Loans of $150,000 or less represent 93% of outstanding PPP loans.”
Square Targets Small Business Banking With New Products
PYMNTS (7/27) interviewed Square Banking Head of Product Christina Riechers on how the company’s “latest suite of financial products for small businesses, Square Banking, can fill a ‘gap’ in business banking that has bedeviled smaller firms for a long time – and levels the playing field with their larger brethren a bit, in terms of cash flow management.” The platform’s “Checking, Savings and Loan products unveiled earlier this month are directly connected to payments themselves, ‘and that makes it easier, and in some cases, an automated way for a seller to manage their business finances,’” said Riechers.
Tips On PPP Loan Forgiveness Provided
After speaking with small business owners, NerdWallet (7/22, Sheehy) provided three tips on navigating the PPP forgiveness process, including the value of relationships with your lender, making sure to keep all COVID-19 related business information in one file, and leaning on the experts at the SBA as well as your bank and other financial professionals.
Marketing Experts Doubt Efficacy Of Carbon Labeling
Popular Science (7/24) discussed carbon labeling, saying it can help environmentally conscious consumers lower their carbon footprint, though “some marketing experts aren’t sure that this is the most effective approach to changing consumer behavior in the long run.” Marketing experts “think that it’s important for consumers to consider their impact on the environment when shopping, the burden shouldn’t be on consumers — especially low-income ones. About 20 firms are responsible for a third of all carbon emissions, so putting pressure on the big players could in the end be more effective than having to count emissions in the grocery store.”
Goldman Sachs Coalition Pushing For Expanded Small Businesses Access To Federal Contracts
The Hill (6/25, Evers-Hillstrom) reported last Friday, “A business coalition led by Goldman Sachs, the Bipartisan Policy Center and Center Forward is pushing lawmakers to help small businesses access federal government contracts.” The Hill said over the past decade, “the number of small businesses contracting with the federal government shrank by 38 percent.” The Hill said Congress could either make the changes prescribed by the coalition to the procurement process within an infrastructure bill or in the SBA reauthorization coming in the next year.
Amazon Touts Success Of Small Business Selling Partners For Prime Day
Winsight Grocery Business (6/25, Strailey) reported that in the wake of the 2021 Prime Day, Amazon is “boasting most about the success of its small business selling partners – makers of typical grocery fare such as coffee, chocolate, health and beauty care items and pet products.” Amazon said that in “24 hours of the promotion, more than 2.5 million customers bought products from small businesses, and after the full two-week period, customers had spent over $1.9 billion on more than 70 million items, which was more than a 100% year-over-year increase on sales compared to the Prime Day 2020 promotion in October.”
Wages and Benefits
Jobless Claims Down 24,000 Last Week
The AP (7/29, Wiseman) reported the number of Americans filing for first-time jobless benefits fell 24,000 to 400,000 last week, “another sign that the job market continues to recover rapidly from the coronavirus recession.” The Wall Street Journal (7/29, Mena, Subscription Publication) reported that economists they surveyed expected claims to come in at 380,000. Bloomberg (7/29, Forte) reported the data signals “that the labor market continues to improve even as the delta variant of Covid-19 rages amid sustained vaccine hesitancy.”
Minimum Wage Of $15 Becoming More Common
The AP (7/27, Rugaber) reported more businesses, particularly in the retail, restaurant, and travel industries, have started offering $15 hourly wages in an effort to attract the new workers they need, although many workers continue to earn a lower hourly wage. The AP said, “Many employers are having to pay more to keep up with larger companies, including Amazon, Costco and Target, that have announced their own pay raises to $15 or more.” Princeton University economist Ellora Derenon court “found that companies in local markets that compete with Amazon, Target or Walmart generally responded by matching their wage hikes dollar-for-dollar.”
Study Finds Cutting Unemployment Benefits Is Not Getting People Back To Work
CNBC (7/22, Iacurci) reported that states repealing pandemic-era programs is not speeding up job recovery, according to a new analysis. Census Bureau data suggest that despite the withdrawal of the unemployment benefits, “recipients didn’t rush to find jobs,” according to University of Massachusetts Amherst economics professor Arindrajit Dube. Dube adds that there “wasn’t a corresponding increase in employment among this group,” rather the number of adults with jobs fell by 1.4% during the same period. He does note that more information and time is needed to analyze the long-term impact of state policies.
Unemployment Rolls Declining Faster In States Cutting Of Enhanced Benefits
The Wall Street Journal (6/27, Morath, Subscription Publication) reported the number of people receiving unemployment benefits is declining more quickly in states that are ending enhanced and extended payments this month, indicating that cutting off the assistance could encourage people to take jobs.
But, the New York Times (6/27, Cohen) said “in the St. Louis metropolitan area, where the jobless rate was 4.2 percent in May, those who expected the June 12 termination would unleash a flood of job seekers were disappointed.” Since Gov. Mike Parson (R) announced “made Missouri one of the first four states to halt the federal aid,” work-force development officials “said they had seen virtually no uptick in applicants. ... And the online job site Indeed found that in states that have abandoned the federal benefits, clicks on job postings were below the national average.” The Times added that “many economists are skeptical that enhanced jobless benefits have played an outsize role in the hiring squeeze. They are more likely to point to child care and continuing health fears with less than half the population fully vaccinated.”
Eight More States To End Enhanced Unemployment Benefits This Weekend
CNBC (6/16, Iacurci) reported on its website that “about 417,000 workers” will “lose unemployment benefits this weekend as eight states withdraw early from pandemic-era programs.” Starting last Saturday, “Alabama, Idaho, Indiana, Nebraska, New Hampshire, North Dakota, West Virginia and Wyoming are opting out of federal unemployment programs.” The states’ Republican governors “claim enhanced benefits are paying people to stay home, thereby creating labor shortages and making it difficult for businesses to hire.” In all, “25 states [are] turning down federal funds ahead of their official expiration on Sept. 6, which will affect about 4 million total recipients.”
Labor Crisis Gives Job Applicants More Options, Power To Make Demands
CBS News (6/17) reported that as millions of Americans quit their jobs, employers are being forced to provide higher wages, among other benefits to attract and keep workers. Companies like Walmart and Bank of America have announced wage increased to ensure worker retention, which resulted in an increase in applicant interest. The article reported, “Workers are in a rare sweet spot” now able “to push for more pay, better work-from-home arrangements and other perks they feel they need to stay, and with plenty of options if they leave.” Glassdoor Chief Economist Daniel Zhao “predicts this will accelerate for several months, as workers who stayed in less-than-ideal jobs during the pandemic search for greener pastures.”